CIT to defer interest payout on notes as it fights to escape bankruptcy filing
FLOUNDERING US bank CIT has said that it will not be able to make a 15 September interest payment on a tranche of 2067 notes.
The bank said in a filing with the Securities and Exchange Commission (SEC) that it could not find an alternative method of payment, meaning that it would have to “mandatorily defer interest on the notes”.
Interest on the instruments, which constitute just a fraction of the bank’s $60bn (£37bn) debt mountain, will continue to accrue until payment is made.
CIT has been flirting with bankruptcy for the past few months, after customers withdrew funds fearing that the bank might collapse and the US government made it clear that it would not bail the firm out.
However, the bank is thought to be considering asset sales and a series of debt-for-equity swaps to save it from going under.
Barclays Capital estimates that if the bank went under, it would be the fourth-largest bankruptcy by assets in history.